RESP's . . . any reccomendations??
 

I want to start putting something aside for our 2 sons future education. I'm thinking of signing up with Knowledge First Financial RESP . . . does anyone have anything good or bad to say about them. Or maybe recommend an alternative:confused:

Re: RESP's . . . any reccomendations??
 

Pay off the mortgage instead... guaranteed return on the money you put into it;)

My RRSPs have done virtually nothing over the last 5 years or so, and frankly I dont see that changing any time soon. Im starting to think the only people that win from Mutual Funds are the people selling them.

Re: RESP's . . . any reccomendations??
 

You only just noticed?

My RRSP has lost money and they took a percentage as a fee for having lost it; they're the only ones guaranteed to make money from pension funds.

Re: RESP's . . . any reccomendations??
 

The only benefit at present is the 30-40% you get back on what you put in at tax time, but thats tempered by the fact that when you withdraw from those retirement funds down the line you pay the tax on that as income then.

Stuff it in something ultra conservative and any growth will barely cover fees and inflation, but at least it should still mostly be there in a couple of years time to do something more aggressive with when and if the market ever recovers:( Its that hope for compound growth that sucks you in, and the hope that they have some clue how to move funds around to shield it from the worst of the economic storm.

Re: RESP's . . . any reccomendations??
 

And over the years in between you've paid 20-30% in fees...

Re: RESP's . . . any reccomendations??
 

i closed my private UK pension back in 2006 for the above reasons...i would actually have earnt more money by stuffing it under the mattress..it was worth far less than what i had paid in over the previous 15 years...due to fees and front end costs.

Re: RESP's . . . any reccomendations??
 

When you sit down and look at the effect of management expenses its an eye opener.

If your fund grew at 5% over 20 years (I wish), but 2% of that went into expenses, the difference between 5% growth and 3% growth after 20 years amounts to 93% of the total you first invested! Someone tell me my numbers are wrong, please:( (5% gives 278% of the initial amount, 3% gives 186%)

Still, watcha gonna do?... I dont know enough about the market to do it myself, I have no idea about bond markets etc, you cant get a tax writeoff that way anyway, so Im open to alternatives that might actually lead to some long term growth but have some security too.

Re: RESP's . . . any reccomendations??
 

Many mutual funds charge 3% pa fees.

My calculation assuming you put $1,200 in a mutual fund on December 31 each year for 25 years, market growth is an average 5%, MER 3% and no bid-offer spread:

Investment $30,000.
Return $36,633
Fees charged $13,630

That is an annual compound investment return of about 1.5%. You are better off in GICs.

On average, in the 20th Century the TSX (inc its predecessors) grew at an average of 3% above inflation. Take off 3% MER and you are left with inflation. I don't recall ever investing in a fund that made the market (here or in the UK), never mind beating it. So, I have been paying someone to lose my money for me.

Nevertheless, it is probably sensible to have some part of your portfolio invested in mutual funds. I suggest a market tracker fund of some sort as it should at least keep up with the market and the MERs are usually lower.

Re: RESP's . . . any reccomendations??
 

Buy silver or gold coins for your kids - they'll be worth way more than any investment.

Re: RESP's . . . any reccomendations??
 

The OPs question was about RESPs and don't you get a 20% top up via the Education Savings Grant on the first $2500 invested per child each year? Surely this would offset against the management charges?

Re: RESP's . . . any reccomendations??
 

http://www.cra-arc.gc.ca/tx/ndvdls/t.../menu-eng.html

Personally, I prefer the TFSA's. http://www.cra-arc.gc.ca/tx/ndvdls/t.../menu-eng.html

Re: RESP's . . . any reccomendations??
 

You are correct. This is a significant return on investment these days.

Re: RESP's . . . any reccomendations??
 

To answer the OP's question, on RESPs (not RRSPs), there's a definite reason to this. Ignore the stuff about mutual funds, just set up a super conservative fund for this one and take the 20% contribution from the government of what you put down. It's free money. Do it, for your kids.

(and if they don't go on to HE you can put your own contribution into RRSPs later anyway).

Good luck.

Re: RESP's . . . any reccomendations??
 

There is an argument that you shouldnt go anywhere near contributing to RESPs until you have maxed out you RRSP headroom.

Kids can get loans for college. Adults dont have that benefit when they retire.

20% tax free on top of RESP contributions up to a max of ??? vs 40% tax back on RRSPs... Not much in it.

Re: RESP's . . . any reccomendations??
 

That's the advice we got back when the kids were young and agree Not much in it. Were also told to use the money to make lump sum down payments on your mortgage so that you'll be better of financially to help your kids thru school.

+1 on the Kids can get loans for college and then they learn some responsibility when going to college or uni - you can always help them pay it off.

Assuming your kids are young, you have at least 15 years to make the investment work for you whether it's RESPs, RRSPs or payments on your mortgage. The way things are going in the world today, I believe there are all a waste of investment capital.

Wish I would have simply bought some gold when my kids were 2 and 3 years old.

Re: RESP's . . . any reccomendations??
 

Its 20/20 hindsite. Gold is a safe haven when there is uncertainty. You would have been better off buying microsoft or apple stock... its all a gamble basically. Gold for a long time did nothing.

Re: RESP's . . . any reccomendations??
 

Shorting bank stocks would have been a better move, essentially betting that the people selling investments didn't know dick. Maybe they still don't.
What I did was to pay off the mortgage before the first child finished high school, that would have allowed the possibility of borrowing against the house to fund degrees but, in the event, there wasn't any need to do it.

Re: RESP's . . . any reccomendations??
 

It's on the first $2000, so a maximum of $400 a year. Then if the kids don't use the funds to go to school, the govt. take it back and you pay tax on all the growth.
We looked at it for our kids and invested elsewhere and got a better return, then gave the kids the money.

Re: RESP's . . . any reccomendations??
 

True - if only I had I crystal ball.

In the uncertainty of today with the money markets, I'd gamble on silver on gold, wouldn't you?

Decisions, decisions - I'll post back on this thread in say 10 years and let you now how I made out ;)

Re: RESP's . . . any reccomendations??
 

Thats OK, with any luck you can just have your butler do it for you:fingerscrossed::thumbup:

Re: RESP's . . . any reccomendations??
 

I would not contribute to an RRSP as a way of providing for children's education. The whole raison d'être of an RRSP is that you contribute while you are working (and your income and tax rate is high) and withdraw from the fund when you retire and your income and tax rate are lower.

If you use it as an education fund you will probably contribute while you are still building your career and withdraw at the height of your earning power. You can end up paying more tax on the withdrawal than you received in refunds for contributing. Not the idea at all.

I would not dismiss an RESP. As said above, it is free money from the government, but choose your provider carefully. They exist to make money from your money. TFSAs are also a good vehicle for savings that you need during your working life.

Re: RESP's . . . any reccomendations??
 

Actually, it's easy. Historically, the best time to buy gold is when the Bank of England is selling.

That's why I bought some back in the 90s, which was worth a lot more by the time I sold it. Would have been worth a lot more today, of course :).

Re: RESP's . . . any reccomendations??
 

With the state of several countries dollar and the Americans extending their license to print money, many say that now is the time to buy. More reason to buy Silver than Gold but that's another discussion.

Re: RESP's . . . any reccomendations??
 

I initially went with TD bank, who I banked with before.

Now recently I have an RESP for my 3 year old with CIBC, not seen any difference really. I chose the safest route with no risks. It's a gain anyway when the government contributes as well as yourself, and end of the day it all helps toward his University education later on (what I am saving it for). The good thing is it can be used for at any recognized University in the world, so your child can study in the U.S, the UK, here, or anywhere.

I say shop around and ensure no fines or fees to pay out for anything at any time, e.g. each year, some charge a fee, I think Scotia bank was one of them but can't 100% remember now.